Tuesday paper round-up: Sterling, Prudential, HSBC

The pound suffered its biggest one-day fall for more than a year yesterday amid the prospect of a hung Parliament and growing fears that this will prevent swift and decisive action being taken over Britain's public finances.

Sterling crashed by more than four cents at one stage against the US dollar, dropping below $1.50 for the first time in ten months. It also fell to its lowest level against the euro for nearly two months, the Times reports.

Three banks handling Prudential's $21bn rights issue will share a record $600m in fees, it emerged yesterday, as the insurer secured a transforming takeover to become the largest international player in the Asian markets. Credit Suisse, JP Morgan Cazenove and HSBC will take the lion's share of the $1bn costs associated with the Pru's cash call, the largest in history, the Times reports.

The head of HSBC's investment banking business, Stuart Gulliver, has received one of the largest bonuses paid by the bank after accepting a £9m bonus. Mr Gulliver, who in addition to running HSBC's Global Banking and Markets business and its asset management arm is also head of the bank's operations in Europe and the Middle East, has been paid the stock bonus in addition to his basic annual salary of £800,000, the Telegraph reports.

Meanhwile, HSBC is heading for another clash with leading shareholders after it vowed on Monday to continue fighting for substantial pay rises for top executives that have been blocked by investors. As the bank revealed that three of its top executives earned more than £9m ($13.5m) each last year, Stephen Green, chairman, said the board believed chief executive Michael Geoghegan was underpaid, the FT reports.

BAE Systems has pleaded guilty to a criminal charge of misleading the United States Government over past arms deals in what a judge has called one of the most serious offences by a defence contractor "in this or any other decade." David Parkes, BAE's company secretary, entered the guilty plea in Washington DC on behalf of the defence group, agreeing to a $400m penalty for conspiracy to defraud and the making false statements to the US Government, the Times reports.

Lord Mandelson wants to impose root-and-branch reform of the City Takeover Code, but has stopped short of introducing a "public interest" test that could block a corporate acquisition by a foreign company. Speaking at Mansion House in the City last night, the Business Secretary said he was in favour of forcing financiers to reveal how much they stand to earn in advisory fees before shareholders vote on a takeover, the Times reports.

Warren Buffett has thrown his weight behind Goldman Sachs and its chairman Lloyd Blankfein, arguing the investment bank has a "place in the universe". Mr Buffett, who has run the Berkshire Hathaway conglomerate since 1965, dismissed the political and public backlash against Goldman, praising Mr Blankfein and the bank's business model, the Telegraph reports.

Diageo has sought to take advantage of the continued march of the Chinese consumer by launching an offer worth up to £610m for a local white spirit venture in the Asian country. The drinks giant said the full offer for the company, which is not expected until the second half of 2010, would give it a springboard to expand its share of one of the fastest-growing spirits markets in the world. It already owns a 39.7% stake in the company, Shui Jing Fang, through a holding company called Quanxing, the Telegraph reports.

Jim O'Neill, Goldman Sachs' chief economist, is drawing up a putative plan to wrest control of Manchester United, the club he has supported since he was a boy, by buying out the Glazer family. Mr O'Neill, a former United board member, organised a meeting of City financiers and advisers on Monday at the offices of Freshfields, the law firm, to discuss the fledgling idea, which seeks to harness the disaffection of fans who want to see an end to the Glazers' regime, the FT reports.

The US has offered to help the UK and Argentina resolve a new dispute over the Falkland islands, but insists that it will remain neutral in the saga."It is our position that this is a matter to be resolved between the UK and Argentina," Hillary Clinton, US secretary of state, said on Monday. "If we can be of any help in facilitating such an effort, we stand ready to do so," the FT reports.

Those who break City rules face a threefold increase in fines for cheating and misleading their customers and for other serious failings, the Financial Services Authority said yesterday. Individuals could be fined up to 40 per cent of their total pay and bonus package, the regulator said in a report that spells out the penalty tariff in much greater detail than before, the Times reports.

Manufacturing output rose at its fastest rate for 14 years in last month thanks to rising orders and strong exports. The sector's purchasing managers' index (PMI) remained at January's 15-year high after five successive months above the neutral half-way point, the Chartered Institute of Purchasing and Supply (CIPS) said yesterday, the Independent reports.

Royal Bank of Scotland stands accused of "cashing in on blood oil" from tar sands just days after the taxpayer-owned bank was battered by the £1.3bn bonus scandal. The bank denied the charge, maintaining that it has "very limited direct involvement" in such projects and pointing to its role as a leading arranger of finance for renewable power schemes, the Independent reports.

Liberty, the 134-year-old British luxury retailer mostly owned by MWB Group Holdings, has confirmed plans for the sale and leaseback of its mock-Tudor flagship store on Great Marlborough Street in London's West End. After months of speculation, the group on Monday said it had instructed Knight Frank to sell the building, which is expected to command a price of £40m, or a 5% yield, the FT reports.